Oil Palm

Oil Palm Gives Smallholders an Economic Lift, but at What Cost?

A decade ago, this author had the pleasure of touring a region of smallholder oil palm farms in northeastern Colombia, the Catatumbo. This wasn’t your typical rural farm tour, however. A military escort had to be arranged in advance as the region was still contested between government forces and armed narco-trafficking rebels.

Colombia had earlier launched a national biodiesel program modeled after a similar initiative in Brazil, only Bogota’s effort was aimed at dealing a blow to the rebels by replacing a key source of the guerilla’s funding, coca, with oil palm instead. It was an experiment into whether government-sponsored biofuel crops could permanently replace illicit crops (coca is, of course, used to manufacture cocaine).

The farmers I spoke with said adding oil palm trees between their other food and cash crops was giving them a badly needed economic lift. One man described how diversifying into oil palm allowed him to finally build a new house for his family, to replace the crumbling and dilapidated structure they’d been living in for years. Another farmer told me he rose from poverty to become the head of his local oil palm cooperative. He insisted oil palm had changed his life.

Oil palm, however, is a controversial addition to smallholder farms. It’s blamed for accelerating deforestation in Southeast Asia, threatening the extinctions of countless numbers of amazing yet increasingly rare plants and animals, including the orangutan. The European Union has been battling Malaysia over the rapid advance of oil palm plantations in that Southeast Asian nation for years. The authorities in Colombia insisted that there was nothing to worry about there—trees were being planted on already cultivated lands, they assured. Even so, is oil palm truly one way to transform the lives of smallholder farmers? And is this crop truly sustainable? Two new studies now seek to answer these questions.

Findings from Sumatra

In Jambi Province, Sumatra, researchers from Finland, Germany, and Indonesia said they recently launched an investigation into the impact of oil palm cultivation on smallholder agricultural communities there. They came into their study skeptical—not only were they concerned about the crop’s environmental implications, but they also expressed suspicions that income gains of the sort described to me by the Colombian farmers were temporary and fleeting.

In Colombia, a biodiesel law had the government setting a floor price on palm oil. In the open market, prices for this commodity can boom and bust as they do with any other agricultural commodity depending on shifting demand. Oil palm can be used to make a host of products, including cooking oils, margarine, and even cosmetics, but other substitutes are used to make these. The researchers were also concerned about equity. “Income gains are expected to improve household living standards, but the concrete effects also depend on how reliable the additional income is, from what source it comes, who in the household controls it, and how well the markets for relevant goods and services function,” Chrisendo et al. wrote in the journal World Development.

The researchers’ investigation spanned six years and involved three separate surveys of smallholder oil palm farmers spaced three years apart. Nearly 700 households were covered in 40 villages. They took a broad view of improved living standards to see if the addition of oil palm to farms was having a positive impact. Beyond money, they checked health and nutrition statistics and communities’ “social connectedness” as well. Their initial findings surprised them.

For nutrition alone “oil palm adopters perform better on all indicators” they wrote. Diversifying into oil palm seemed to improve the lives of the farmers in virtually every way measurable. “Oil palm cultivation leads to significantly positive effects on education, nutrition, dietary quality, general living conditions, and asset ownership,” this study concludes. Those farmers in northeastern Colombia weren’t lying to me after all.

But is it sustainable?

Still, the researchers admitted that there could be an unfortunate tradeoff here—improved socioeconomics at the cost of a degraded environment, the focus of a separate investigation into oil palm’s impact.

“Oil palm cultivation leads to significantly positive effects on education, nutrition, dietary quality, general living conditions, and asset ownership.”

Writing in the journal Sustainability, researchers from the University of Bengkulu in Indonesia described how they sought to quantify the sustainability of oil palms’ spread into smallholder agriculture in their country. They benchmarked “sustainability” against the United Nations Sustainable Development Goals, giving them 13 concrete indicators to use, including environmental sustainability. Their findings agreed with the study from Sumatra in that significant economic and social gains could be had from helping smallholders diversify into oil palm, but they insisted that can’t be the only goal. “The development of smallholder oil palm plantations, like other economic developments, wherever conducted needs to provide benefits to the community such that it exceeds the costs of preserving and protecting the environment,” they said. Through their initial investigation, they hoped to get a handle on whether or not the needs of nature can be balanced with the needs of smallholder oil palm farmers.

Their conclusions? It’s too soon to tell.

“Additional empirical research is needed that broadens the time horizon to capture the dynamics and improve understanding of the impact of oil palm plantations,” the authors wrote. They hypothesize that planting oil palms on smallholder plots can be done in an environmentally sustainable manner, avoiding deforestation while sequestering carbon through palm trees’ biomass. Far more important to the sustainability question is whether smallholder oil palm farmers can be encouraged to follow what they call Good Agricultural Practices, vaguely defined as practices that don’t damage “the capacity of the environment to provide environmental services.”

There seems to be good evidence that adding oil palm to farmers’ crop portfolios can raise incomes and other positive social indicators, including nutrition and health. But is it worth the environmental risks? More research on agroecology of oil palm cultivation, especially how to grow it on land that’s currently used for other crops as opposed to forest, may help to create a win-win for farmers and the environment.

Grow Further

Photo credit: A smallholder oil palm plantation in the Catatumbo region of Colombia near the Venezuelan border. Nathanial Gronewold.

Subscribe to Our Newsletter